ACCOUNTING DEPARTMENT WORKFLOW

1. ACCOUNTING DEPARTMENT WORKFLOW VIRTUAL ENTERPRISES, INTERNATIONAL Virtual Enterprises, International

2. Source documents needed: • Purchase orders • Purchase invoices • Sales invoices • Bank statements • Tax Forms Virtual Enterprises, International

3. Accounting Journals/Records & Forms Required • Cash receipts/cash payments journal • Purchases journal/accounts payable record • Sales journal/accounts receivable record • Inventory records • Asset log • Payroll register Virtual Enterprises, International

4. When and where are transactions recorded? • Receive cash: Enter amount received in the cash receipts and payments journal. Update accounts receivable record if the cash receipt is for payment of a sale made on account. • Pay cash: Enter the amount paid in the cash receipts and payments journal. Update the accounts payable record if the cash payment is for a purchase made on account.   • Send a purchase order: Do not record this event into the accounting records. • Receive an invoice: Enter the purchase in the purchases journal and update theaccounts payable record. • Receive what was ordered: If you receive merchandise inventory, update the inventory control record. If you receive an asset, update the asset log.  • Receive a purchase order: Prepare an invoice. • Prepare (and send) an invoice: Enter the sale in the sales journal and update the accounts receivable record. • “Ship” merchandise to a customer: Update the inventory control record.  • Prepare (and pay) payroll: • Use the payroll register to determine the amount of each employee's gross and net pay. • Record the amount of net pay paid to all employees in the cash receipts and payments journal. • Record the amount of payroll withholdings in the cash receipts and payments journal. Virtual Enterprises, International

5. RECORDING A SALE The sales department creates an INVOICE; retains one copy and forwards a copy to accounting. You receive a PURCHASE ORDER or an ORDERFORM (through your website, mail, or fax). “Ship” the merchandise to the customer and then update theINVENTORYRECORDS. Details from the invoice are entered into the SALESJOURNAL/ACCOUNTSRECEIVABLERECORD. Staple the PURCHASEORDER/ORDERFORM and INVOICE together and file in a binder in numerical order by Invoice. Send the Invoice to the customer. Order INVENTORY when needed. Note: Review the Invoice binder periodically and send out overdue reminders. Virtual Enterprises, International

6. MAKING A PURCHASE Once you receive an invoice from the vendor, enter the purchase details into the PURCHASESJOURNAL/ACCOUNTS PAYABLE RECORD. Do not record the purchase until vendor sends an invoice. Your company completes a PURCHASEORDER (or the selling company’s order form) and sends it to the selling company (the vendor). Keep a file copy in the PURCHASES binder. The invoice is forwarded to the accounting VP for approval (i.e., compare invoice to purchase order, looking for discrepancies). If the purchase was for merchandise inventory, update the INVENTORYRECORDS. If approved, forward to bank manager for payment. If not approved, contact vendor to resolve discrepancy. Virtual Enterprises, International

7. RECORDING CASH RECEIPTS AND PAYMENTS Each week the BankManager prints out current bank transactions (checking details). • The Accounting Department records ALL transactions in the CASHRECEIPTSANDPAYMENTSJOURNAL. Transactions arelistedtwice: • On the left side of the form in the cash receipt or cash payment column • On the right side of the form in the column that best describes the reason for the payment or receipt of cash. If the receipt of cash is a payment for a sale made on account, retrieve the sales invoice from the binder, mark it paid, file it and update the SALESJOURNAL/ ACCOUNTSRECEIVABLERECORD to reflect the payment. If a payment has been made for a purchase made on account, retrieve the purchase invoice from the binder, mark it paid, file it and update the PURCHASES JOURNAL/ACCOUNTS PAYABLE RECORD. Virtual Enterprises, International

8. PAYROLL The Payroll Associate (Human Resources?) completes the PAYROLLREGISTER for the pay period. The original is filed in a binder and a copy is given to the Bank Manager. The Payroll Associate creates and distributes pay stubs. On the 15th of the month, the Bank Manager submits and pays the 941 TAX FORM for the previous month. All tax forms are filed in a binder. The Bank Manager pays each employee. The payment of the payroll tax is now entered into the CASH PAYMENTS JOURNAL. The payroll is now entered into the CASH PAYMENTS JOURNAL. Note: Payroll is completed twice a month. Virtual Enterprises, International

9. SUMMARY • Sales Journal/Accounts Receivable, Purchases Journal/Accounts Payable, and Inventory Records are updated as needed. • Payroll is completed twice a month. • Bank Statements should be printed out at least once a week. • Cash Receipts and Payments Journal should be updated each time a bank statement is printed. • Tax Forms should be completed according to the calendar. • 941 – monthly • Sales tax – quarterly • W2 and W3 – yearly • 1040 individual tax return – yearly • 1120 Corporate tax return – yearly Virtual Enterprises, International